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Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
and
XXXXX X. XXXXXXXXXX
Employment Agreement ("Agreement"), effective as of January 1,
2000, between Xxxxx X. Xxxxxxxxxx ("Executive") and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (the "Company"), with its principal
office at 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxx Xxxx 00000.
WHEREAS, Executive has served as Chairman and Chief Executive
Officer of the Company or its predecessors since December 1994 and currently
serves as such;
WHEREAS, the Company desires to continue the services of
Executive as its Chairman and Chief Executive Officer and to enter into an
agreement embodying the terms of such continuing relationship; and
WHEREAS, Executive is willing to accept such continued employment
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive and the Company hereby agree as follows:
ARTICLE I
Employment and Term
Section 1.01. Position; Responsibilities.
(a) The Company hereby employs and continues the employment
of Executive as its Chairman and Chief Executive Officer ("CEO") upon the terms
and conditions hereinafter set forth.
(b) As CEO, Executive shall at all times be senior-most
officer of the Company, with the duties, responsibilities and authority
customarily associated with such position and consistent with such duties,
responsibilities and authority as have heretofore been his as CEO. Such duties
include authority and responsibility for acquisitions, divestitures, finance and
investor relations, subject to policies adopted by the Board of Directors of the
Company (the "Board"). Executive shall perform such other additional duties and
services of a
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senior executive nature, consistent with his position as CEO of a large,
publicly traded company, as may be requested of him from time to time by the
Board.
Section 1.02. Performance of Duties; Other Commitments and Activities.
(a) Executive shall at all times endeavor to duly and
faithfully perform all of his duties hereunder to the best of his abilities.
(b) Executive shall devote such time and effort as may be
necessary and appropriate from time to time in the circumstances for the proper
discharge of his duties and obligations under this Agreement. The Company
acknowledges that Executive is involved in other business endeavors, including
with Starwood Capital Group L.L.C. ("SCG"), as well as serving on outside boards
and managing personal investments and as a consequence performs multiple
executive roles. Subject to the Executive's duties and obligations to the
Company as set forth in this Section 1.02(b) and subject to non-competition
agreements between the Company and Executive and between the Company and SCG,
the Company consents to the continuation of Executive's additional business
endeavors and multiple executive roles.
(c) Executive's base of operations under this Agreement shall
continue to be White Plains, New York although Executive may, at his election,
render his services from other locations. Executive shall not be required to
relocate to or render services in, on other than a temporary basis, another
location that is more than a 20-mile radius from the White Plains' location.
Section 1.03. Term. Executive's term of employment under this Agreement
(the "Term") shall commence on the date hereof (the "Commencement Date") and
shall expire on December 31, 2002, unless extended or sooner terminated as
herein provided.
Section 1.04. Representation and Warranty of Executive. Executive hereby
represents and warrants to the Company that he is not aware of any presently
existing fact, circumstance or event (including, but without limitation, any
health condition or legal constraint) which would preclude or restrict him from
providing to the Company the services contemplated by this Agreement, or which
would give rise to any breach of any term or provision hereof; or which could
otherwise result in the termination of his employment hereunder for Cause or
Good Reason (as such terms are hereinafter defined).
Section 1.05. Representation and Warranty of Company. The Company hereby
represents and warrants to Executive that (i) it is not aware of any fact,
circumstance or event which would give rise to any breach of any term or
provision of this Agreement, or which would form the basis for any claim or
allegation that Executive's employment hereunder could be terminated for Cause
or Good Reason hereunder; and (ii) it has received all authorizations and has
taken all actions, necessary or appropriate for the due execution, delivery and
performance of this Agreement, all options described in Section 2.04(b).
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ARTICLE II
Compensation
Section 2.01. General. The Company shall compensate Executive for all his
services under this Agreement, as set forth herein.
Section 2.02. Basic Compensation. Executive's minimum annual salary ("Base
Salary") shall be at the rate of $1,000,000 and shall be payable in bi-weekly or
other installments in accordance with the Company's normal payment schedule for
senior management (not less frequently than monthly). The Base Salary shall be
subject to annual review commencing at the end of 2000 and at the end of each
year thereafter during the Term, and may be increased (but not decreased) for
subsequent years.
Section 2.03. Incentive Compensation. In addition to the Base Salary, the
Company shall pay to Executive as incentive compensation ("Incentive
Compensation") in respect of each calendar year (or portion thereof) of the
Company, an amount determined pursuant to and in accordance with the Company's
1999 Annual Incentive Plan for Certain Executives, or any successor plan (the
"Annual Incentive Plan"); provided, however, that (i) as Incentive Compensation
for the full calendar year ending December 31, 1999, the Company will pay
Executive $1,650,000, and (ii) the bonus payable to Executive upon attainment of
the minimum threshold Performance Measure requirement established under the
Annual Incentive Plan for each year during the Term shall not be less than
$1,325,000.
All Incentive Compensation earned under this Section 2.03 shall
be payable as soon as reasonably practicable, but in no event later than 120
days after the end of the relevant calendar year.
Section 2.04. Equity Incentives and Other Benefit Programs.
(a) On and prior to September 25, 1997, Executive was granted
certain options, warrants, restricted stock and performance awards under the
Starwood Lodging Trust 1995 Long-Term Incentive Plan (as it has been amended and
restated, from time to time, as of and subsequent to August 12, 1996) (as well
as certain options which were granted under the Starwood Lodging Trust 1995
Share Option Plan, prior to the amendment and restatement thereof as of August
12, 1996) and which were modified by the Employment Agreement between Executive
and Starwood Hotels & Resorts Trust dated February 17, 1998 (the "1998
Employment Agreement"), and options which were granted to Executive on January
26, 1999 (all such awards, warrants, stock and options, the "Pre-Existing
Awards"), all of which grants and awards are hereby confirmed as having been
duly and validly authorized and issued, and being in full force and effect as of
the date of execution of this Agreement.
Nothing in this Agreement shall be deemed to modify or otherwise
affect any of the terms or provisions (including, but without limitation, any
contingencies and any modifications made by the 1998 Employment Agreement) of
any Pre-Existing Awards.
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(b) Initial Option Grant. In an option agreement in
substantially the form attached hereto as Exhibit A, and reflecting the terms
and conditions of this Section 2.04(b), the Company, pursuant to the Starwood
Hotels & Resorts Worldwide, Inc. 1999 Long-Term Incentive Plan ("the 1999
LTIP"), on March 3, 2000, granted Executive a nonqualified stock option to
purchase 1,500,000 Units, as defined in the 1999 LTIP, (the "Units") at an
exercise price equal to $21.8125 per unit (the "Option"). Subject to Section
3.02(b), the Option shall vest and become exercisable in accordance with the
following provisions of this Section 2.04(b) and shall remain exercisable
throughout its term. The Option shall vest and become exercisable with respect
to 500,000 Units on December 31, 2000. The Option shall vest with respect to a
second 500,000 Units (the "Second Installment") on December 31, 2001. With
respect to the Second Installment, the option will become exercisable on the
later of December 31, 2001 and the first date following January 1, 2000 upon
which Shares of the Company's Common Stock trade at a price per share of $25.59
or more on the New York Stock Exchange (or if such Common Stock ceases to be
traded on the New York Stock Exchange for any reason, then the price listed on
the applicable exchange, market or quotation system). The Option shall vest with
respect to the remaining 500,000 Units (the "Third Installment") on December 31,
2002. With respect to the Third Installment, the option will become exercisable
on the later of December 31, 2002 and the first date following January 1, 2000
upon which Shares of the Company's Common Stock trade at a price per share of
$30.06 or more on the New York Stock Exchange (or if such Common Stock ceases to
be traded on the New York Stock Exchange for any reason, then the price listed
on the applicable exchange, market or quotation system). Notwithstanding the
foregoing, the Option will become exercisable with respect to the 1,000,000
Units not becoming exercisable on December 31, 2000, on December 31, 2004. The
exercise price of the Option, the number of Units subject to the Option and the
prices that cause the Option to become exercisable shall be appropriately
adjusted in the event of any stock dividend, stock split, stock combination,
spin-off, split-off, split-up, reclassification, recapitalization or any
transaction similar thereto. An adjustment shall be considered "appropriate"
within the meaning of the preceding sentence if, and only if, after such
adjustment, (i) the difference between the price at which the Executive is
entitled to exercise each Option, and the fair market value of the securities
subject to each such Option is at least as great as in effect immediately before
any such adjustment and (ii) the terms of the securities subject to each such
Option impose no greater limitation on the possibility of further increases in
their fair market value than were in effect immediately before such adjustment.
Subject to Section 3.02(b), the Option shall continue to vest until the Option
is fully vested or, if earlier, until the date on which the Executive holds
neither the position of Chairman or CEO with the Company. In addition to the
rights granted to Executive under Section 3.02(b), if the Executive's employment
is terminated by the Company for any reason other than "Cause" as defined in
Section 3.01(d) at any time before the Option has become exercisable in full,
the Option shall become immediately vested and become immediately exercisable in
its entirety, and the Executive shall be entitled to continue to hold the Option
and to exercise it, or any portion of it, until the earlier of (i) the third
anniversary of the date of the termination of Executive's employment or (ii) the
tenth anniversary of the date on which the Option was granted.
The option agreement shall provide that Executive may transfer
the Option to his spouse or issue, a trust or trusts maintained for their
benefit, a partnership, LLC or LLP, in which
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such family members, with or without Executive, own at least a 98 percent
interest in capital and profits, or a corporation at least 98 percent of the
stock of which is owned by such family members, such trusts, and Executive.
(c) Future Option Grants. The Company shall grant Executive
an option in January of each subsequent year during the Term. It is the
intention of the parties that such future grants for the two remaining years of
the Term shall be made to Executive consistent with then-prevailing market
conditions, but generally such future grants will be for no less than the number
of Units (adjusted as necessary for any dilution, stock dividend, stock split,
stock combination, spin-off, split-off, split-up, reclassification,
recapitalization or any transaction similar thereto), and on terms no less
favorable than those applicable to, the Option provided for in Section 2.04(b)
and contained in Exhibit B.
(d) During the Term, Executive shall be entitled to
participate in the LTIP, any successor plan and all employee benefit plans,
including retirement programs, if any, group health care plans, and all fringe
benefit plans, of the Company. Such plans shall at all times be comparable to
those made available to the senior-most management of the Company. In addition,
the Company shall provide Executive with the following benefits during the Term:
(i) use of an automobile driver and car service for
business purposes consistent with past practice prior to the execution of this
Agreement;
(ii) priority scheduling on the Company aircraft, if
any, for business purposes;
(iii) first-class travel accommodations (air and
lodging) for business-related travel (including the reasonable travel expenses
incurred by Executive's spouse when accompanying Executive on business-related
travel); and
(iv) tax preparation and financial planning assistance
up to a maximum cost of $25,000 per calendar year.
(e) During the Term, the Company shall pay the premiums on and
maintain in effect a whole life or universal life insurance policy (the
"Executive Insurance Policy") on Executive's life in the face amount of
$10,000,000, the proceeds of which shall be payable to Executive's estate or
such other person or persons as Executive shall designate. The Executive
Insurance Policy shall be owned as directed by Executive. At Executive's
election the Executive Insurance Policy shall be maintained on a split-dollar
basis, the Company shall enter into a split-dollar agreement suitable to
Executive, and the face amount of the Executive Insurance Policy shall be
increased to fully compensate for any rights or interest the Company may have
with respect to the policy under the split-dollar agreement. The Company shall
not be required to maintain such insurance after termination of Executive's
employment for any or no reason, but upon such termination the Company shall
take all actions reasonably requested by Executive necessary to transfer any and
all rights or interests it may have with respect to such policy as the Executive
directs at no cost to Executive.
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(f) The Company shall reimburse Executive for all legal fees
reasonably incurred by Executive in connection with the negotiation and
execution of this Agreement.
Section 2.05. Expense Reimbursements. The Company shall reimburse Executive
for all proper expenses incurred by him in the performance of his duties
hereunder in accordance with the policies and procedures of the Company as in
effect from time to time.
Section 2.06. Withholding. The Base Salary and all other payments to
Executive for his services to the Company shall be subject to all withholding
and deductions required by federal, state or other law (including those
authorized by Executive but not otherwise required by law), including but not
limited to state, federal and local income taxes, unemployment tax, Medicare and
FICA, together with such deductions as Executive may from time to time
specifically authorize under any employee benefit program which may be adopted
by the Company for the benefit of its senior executives or Executive.
ARTICLE III
Termination of Employment
Section 3.01. Termination.
(a) Executive's employment hereunder shall be terminable by
either party with or without Cause and with or without notice except as
otherwise provided herein, but with the effect set forth herein.
(b) Executive shall give the Company at least 30 days'
advance written notice prior to any termination by Executive other than for Good
Reason. The Company shall give Executive at least 30 days' advance written
notice prior to any termination of Executive without Cause.
(c) Executive may resign and terminate his employment
hereunder for Good Reason (which shall also be deemed a termination by the
Company other than for Cause), subject, however, to prior delivery to the
Company of a Preliminary Notice of Good Reason and the failure of the Company to
remedy the same within the cure period provided below. For purposes of this
Agreement, "Good Reason" means (i) the failure to elect and continue Executive
as CEO or Chairman of the Company or to nominate Executive for re-election as a
member of the Board (unless a Cause Termination Notice (as hereinafter defined)
shall theretofore have been given to Executive); (ii) the assignment to
Executive of duties, authorities, responsibilities and reporting requirements
inconsistent with his position, or if the scope of any of Executive's material
duties or responsibilities as CEO of the Company is reduced or expanded to a
significant degree without Executive's prior consent, except for any reduction
in duties and responsibilities due to Executive's illness or disability or
temporary suspensions of duties and responsibilities pending results of any
Board-commissioned investigation as to potential Cause for termination of
Executive's employment and except if a Cause Termination Notice shall
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theretofore have been given to Executive; (iii) a reduction in or a substantial
delay in the payment of Executive's compensation or benefits from those required
to be provided in accordance with the provisions of this Agreement, including
any reduction of Executive's bonus opportunity under Section 2.03 and
Executive's rights under Exhibit A, including (A) a materially adverse change in
the manner of setting Performance Measure requirements under the Annual
Incentive Plan, or (B) an increase in those requirements that is materially
inconsistent with prior practice; (iv) a requirement by the Company or the
Board, without Executive's prior written consent, that Executive be based in
another location that is more than a 20-mile radius from the White Plains, New
York location, other than on travel reasonably required to carry out Executive's
obligations under this Agreement; (v) the failure of the Company to indemnify
Executive (including the prompt advancement of expenses), or to maintain
directors' and officers' liability insurance coverage for Executive, in
accordance with the provisions of Section 5.12 hereof; (vi) the Company's
purported termination of Executive's employment for Cause other than in
accordance with the requirements of this Agreement; (vii) a "Change of Control"
as such term is defined and used in the LTIP, shall have occurred (unless a
Cause Termination Notice shall theretofore have been given to Executive); (viii)
the failure, by December 1, 2002, of the Company and Executive to agree to an
extension of the Term beyond December 31, 2002, (ix) the failure of any
successor company to the Company to assume this Agreement in accordance with
Section 5.02 hereof; and (x) any other breach by the Company of any provision of
this Agreement; provided, that in the event Good Reason is based on clause (ii),
(iii), (iv), (v), (ix) or (x) above, (a) "Good Reason" shall not include an act
which is cured by the Company within 30 days from receipt by the Company of a
written notice from Executive (a "Preliminary Notice of Good Reason")
identifying in reasonable detail the act(s) or failure(s) constituting Good
Reason; provided that during the Term the Company shall the opportunity to cure
only one occurrence described in each of clauses (ii), (iii), (iv), (v), (ix) or
(x) above, (b) Good Reason shall not exist unless the Preliminary Notice of Good
Reason shall have been given by Executive within 60 days after learning of the
act, failure or event (or, in the case of a series of related acts, failures or
events, within 120 days of the first such act, failure or event) which Executive
alleges constitutes Good Reason hereunder, (c) if the Company has failed to cure
as provided above, Good Reason shall not exist unless Executive shall have given
notice of termination hereunder for Good Reason within 60 days from delivery of
the Preliminary Notice of Good Reason (which termination shall be effective 30
days from the giving of such notice), and (d) if the Company has commenced an
expedited arbitration in the manner prescribed below within 15 days after
receipt of Executive's notice of termination called for under the immediately
preceding clause (c), such termination shall not be effective as a termination
of employment and shall not be deemed a termination by Executive for Good Reason
unless and until the Arbitrator shall have determined otherwise. If the Company
has timely commenced such an arbitration proceeding, in the manner prescribed
below, no payments shall be due Executive under Section 3.02 (i) or (ii) hereof
until the conclusion of the arbitration proceeding or further proceeding
contemplated by Section 5.04 hereof and only if an award is rendered by the
Arbitrator in favor of Executive. Notwithstanding the foregoing, if the Company
fails to file a demand for arbitration with the American Arbitration Association
("AAA") and pay the requisite fees pursuant to Rule 4 of the AAA's National
Rules for the Resolution of Employment Disputes effective June 1, 1996, as
hereafter amended from time to time (the "National Rules") within 30 days after
receipt of notice
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of termination from Executive, and diligently pursue such proceeding in
accordance with the procedures set forth in Section 5.04 hereof, Executive's
termination of employment from the Company shall be conclusively presumed to
have been for Good Reason.
(d) The Company shall have the right to terminate Executive's
employment hereunder for Cause. For purposes hereof "Cause" shall be defined as
Executive's having (i) been convicted of a criminal offense constituting a
felony, (ii) committed one or more acts or omissions constituting fraud or
willful misconduct that have had a material detrimental effect upon the Company,
or (iii) failed, after written warning from the Board specifying in reasonable
detail the breach(es) complained of, to substantially perform his duties under
this Agreement (excluding, however, any failure to meet any performance
targets), except where such failure results from Executive's incapacity due to
physical or mental illness. For purposes of the foregoing, no act or failure to
act on the part of Executive shall be considered "willful" unless it is done, or
omitted to be done, by Executive without reasonable belief that Executive's
action or omission was in the best interests of the Company. Any act or failure
to act that is expressly authorized by the Board pursuant to a resolution duly
adopted by the Board, or pursuant to the written advice of counsel for the
Company, shall be conclusively presumed to be done, or omitted to be done, by
Executive in the best interests of the Company.
Notwithstanding the foregoing, termination by the Company for
Cause shall not be effective until and unless each of the following provisions
shall have been complied with: (i) notice of intention to terminate for Cause (a
"Preliminary Cause Notice"), the giving of which shall have been authorized by a
vote of not less than 75% of all disinterested Directors then in office which
shall include a written statement of the particular acts or circumstances which
are the basis for the termination for Cause and shall set forth a reasonable
period (not less than 30 days) to cure (the "Cure Period"), shall have been
given to Executive by the Board within sixty days after the Company first learns
of the act, failure or event constituting Cause; and (ii) Executive shall not
have cured the acts or circumstances complained of within the Cure Period; and
(iii) the Board shall have called an in personam meeting of the Board, at which
termination of Executive is an agenda item, and shall have provided Executive
with not less than 20 days' notice thereof; and (iv) Executive shall have been
afforded the opportunity, accompanied by counsel, to provide written materials
to the Directors in advance of such meeting and, if he so desires, to personally
address the Directors at such meeting; and (v) the Board shall have provided,
within three business days after such meeting, a written notice of termination
for Cause, stating that, based upon the evidence it has received and reviewed,
and specifying in reasonable detail the acts and circumstances complained of, it
has voted by a vote of at least 75% of all of the disinterested Directors then
in office to terminate Executive for Cause (such a notice, a "Cause Termination
Notice"), which such notice shall be effective on the sixteenth day after
receipt thereof by Executive, subject to the provisions hereof; provided that if
Executive has commenced an expedited arbitration in the manner prescribed below
within 15 days after his receipt of the Cause Termination Notice, disputing the
Company's right under this Agreement to so terminate for Cause, Executive shall
not be deemed to have been terminated for Cause unless and until the Arbitrator
shall thereafter have determined that Executive was properly terminated for
Cause in accordance with the provisions hereof; and provided, further that the
Company may
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suspend Executive (a) with pay, at any time after any indictment of Executive
for a criminal offense constituting a felony, and (b) without pay, at any time
after the giving of the Cause Termination Notice, except that any payments not
so made shall be made within three business days after the Arbitrator shall have
made a determination that Executive was terminated other than in compliance with
the foregoing provisions relating to termination for Cause. If Executive or his
representative fails to file a demand for arbitration with the AAA and pay the
requisite fees pursuant to Rule 4 of the National Rules within 30 days of his
receipt of a Cause Termination Notice from the Board, and diligently pursue such
proceeding in accordance with the procedures set forth in Section 5.04 hereof;
such termination shall be conclusively presumed to have been for Cause; it being
understood and agreed that any decision of the Arbitrator that Executive has
been terminated hereunder for Cause or any failure of Executive to contest the
Company's allegations of Cause hereunder (by failing to file and/or prosecute a
demand for arbitration or otherwise), is not intended to, and shall not, have
any effect or bearing whatsoever on any Pre-Existing Award, and the parties
specifically agree and undertake that, notwithstanding anything to the contrary,
no finding of any Arbitrator pursuant hereto that Executive was properly
terminated for Cause under this Agreement shall be binding upon or admissible in
any court or other proceeding in which any Pre-Existing Awards are at issue.
If the Arbitrator declines to rule that Executive was terminated
for Cause, Executive shall be treated as having been terminated without Cause
and Executive shall have the rights provided under Section 3.02 below and
provided elsewhere in this Agreement with respect to a termination without
Cause.
For all purposes of this Agreement, "Good Reasons" and "Cause"
shall have the applicable defined meaning as set forth above in this Section
3.01.
No termination of Executive's employment shall require that
Executive resign any other position (including as Director or Chairman) he may
then be holding with the Company; provided, however, that (i) if Executive's
employment hereunder is terminated for Cause under the above provisions,
Executive shall resign forthwith from all positions he may then be holding with
the Company, if requested to do so by the Board, and (ii) if Executive
terminates his employment hereunder other than for Good Reason, Executive shall
resign forthwith from all such positions, if requested to do so by the Board,
except for any position to which he has been elected by the shareholders of the
Company (such as Director).
Section 3.02. Severance Package. In the event Executive's employment under
this Agreement is terminated by the Company other than for Cause (and a
termination due to the Executive's death or permanent disability shall be
treated for purposes of this Agreement as a termination by the Company other
than for Cause) or is terminated by Executive for Good Reason, then, as and for
a severance package ("Severance Package"):
(a) Executive shall, subject only to the delays permitted by
Section 3.01 for arbitration, receive (A) an amount, which shall be payable in
one lump sum as soon as practicable, but in any event within 30 days of the date
of Executive's termination, equal to the sum of (1) the product of (a) the
greatest amount of Incentive Compensation paid to Executive
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with respect to any of the three full calendar years ending immediately prior to
the calendar year in which the termination of employment occurs (the "Annual
Bonus") multiplied by (b) a fraction, the numerator of which is the number of
completed days in the calendar year of such termination of employment through
the date of such termination and the denominator of which is 365 and (2) the
product of 2 times the sum of (a) the annual Base Salary then in effect, plus
(b) the Annual Bonus; and (B) Company paid medical insurance benefits available
to other senior executives of the Company during the current or future 12-month
period subsequent to termination of employment, all costs of which shall be paid
by the Company (and thereafter all COBRA rights available to Executive shall be
paid by Executive); provided that the Company shall deposit the amount described
in clause (A) above in escrow within 10 days of the Company's or Executive's
filing a demand for arbitration in accordance with Section 3.01(c) or 3.01(d),
as applicable; provided that in such event, the amount held in escrow shall be
paid to the appropriate party by the escrow agent within 5 days of the date of
determination that Executive's termination is other than for Cause or for Good
Reason, as applicable; and
(b) The Option granted pursuant to Section 2.04(b) and any
future options granted to Executive pursuant to Section 2.04(c) shall,
notwithstanding any provision to the contrary contained in this Agreement,
Exhibit A or any future option agreement(s) covering the Option and such future
option grants, immediately vest in full and immediately become exercisable. The
Option granted pursuant to Section 2.04(b) and any future options granted to
Executive pursuant to Section 2.04(c) shall remain exercisable until the sooner
of: (i) the third anniversary of Executive's Termination Date, or (ii) the
expiration of the tenth anniversary of the Option's grant and following
Executive's exercise of any such option, Executive shall receive title to the
shares issued upon exercise in respect thereof free and clear of any lien, claim
or encumbrance by, through or under the Company.
In addition, any Deferred Units credited to Executive under the
Company's 1999 Annual Incentive Plan for Certain Executives shall immediately
vest in full.
If a corporate transaction which would constitute a Change of
Control event under the LTIP is agreed to during the pendency of an arbitration
hereunder, the Company will include appropriate provisions which will enable
Executive to participate in such Change of Control event as if the arbitration
were resolved favorably to Executive, but subject to such a favorable
resolution.
The parties agree that the foregoing shall be Executive's sole
and exclusive monetary remedy under this Agreement by reason of termination by
Executive for Good Reason or by the Company other than for Cause, it being
agreed that as his actual damages under this Agreement would be difficult to
measure or quantify and would be impracticable to determine, such amount shall
constitute liquidated damages under this Agreement for Executive by reason of
such termination by Executive for Good Reason, or by reason of any termination
by the Company other than for Cause hereunder. Such payments shall not be
reduced or limited by amounts Executive might earn or be able to earn from other
employment or ventures. The parties agree that the Company shall have no
recourse whatsoever to any monetary remedy by
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reason of Executive's termination of employment, other than for reimbursement of
actual out-of-pocket damages actually suffered and incurred by the Company as a
direct result of Executive's termination by the Company for Cause hereunder
(excluding the costs of identifying and/or hiring any replacement for Executive,
or any attorney's fees or costs of investigation, which shall be borne solely by
the Company), all of which are hereby waived; provided, however, that the
foregoing limitation shall not apply to any claims the Company may have against
Executive relating to tortious conduct by Executive which causes damage to the
Company or to any claims Executive may have against the Company relating to
tortious conduct by the Company which causes damage to Executive.
Section 3.03. Rights on Termination for Cause or Without Good Reason. No
Severance Package shall be due or owing to Executive in the event that the
Company shall fully terminate Executive's employment for Cause or in the event
that Executive shall terminate his employment with the Company for reasons other
than Good Reasons; provided, however, that Executive shall in all events be paid
all accrued but unpaid Base Salary, earned but unpaid Incentive Compensation,
and other benefits through the date of termination. For purposes of this
Agreement, Incentive Compensation shall be considered to be earned if the cycle
for which the Incentive Compensation is to be measured has been completed,
notwithstanding the fact that the amount may not have been calculated at the
time the Executive's employment is terminated and notwithstanding any
requirement that the Executive be employed at the payment date of such Incentive
Compensation.
Section 3.04. Effect of Change in Control Agreement. Notwithstanding any
provision of this Agreement to the contrary, if the Executive's termination of
employment, follows a Change in Control of the Company, as defined in the Tier I
Severance Agreement between the Company and the Executive, dated December 14,
1999 (the "Change in Control Agreement") and the Change in Control Agreement is
in effect, the Executive shall be entitled to receive, with respect to each
benefit or payment described above, the greater of the net benefit provided
under this Agreement or the net benefit provided under the Change in Control
Agreement. If either of those Agreements provides a benefit or payment to the
Executive that is not a subject of the other Agreement, that benefit or payment
will be paid to the Executive in accordance with the terms of the applicable
Agreement.
ARTICLE IV
Confidential Information; Including Company Employees
Section 4.01. Confidential Information. Except in the course of his
employment with the Company, or as he may be required pursuant to any law or
court order of similar process, Executive shall not at any time either during or
after his termination of employment hereunder, directly or indirectly disclose
or use any secret, proprietary or confidential information or data of the
Company, or any of its subsidiaries or affiliates; provided, however, that after
the expiration of 18 months from such termination of employment, the Company's
sole remedy shall be to seek and procure appropriate equitable remedies. In the
event of any dispute between Executive and
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the Company or between Executive or the Company and others, Executive shall
cooperate with the Company as to redaction or other protective measures with
respect to any unnecessary public disclosure of any such confidential
information or proprietary data.
Section 4.02. Inducing of Company Employees. Except in the course of his
employment with the Company, or with the prior written approval of the Board,
Executive shall not at any time through the 12 month period after his
termination of employment hereunder, in any way directly or indirectly hire or
attempt to hire any party any person or persons who to Executive's best
knowledge was employed at any time during the period commencing six months prior
to such termination by the Company or its subsidiaries or SLT Realty Limited
Partnership or SLC Operating Limited Partnership.
ARTICLE V
Miscellaneous
Section 5.01. Notices. All notices, request or other communications
provided for in this Agreement shall be made, if to the Company, to the
Secretary of the Company at the Company's principal executive office, and if to
Executive, to his address on the books of the Company (or to such other address
as the Company or Executive may give to the other in writing for purposes of
notice hereunder).
Copies of all notices given to Executive shall be sent to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Copies of all notices given to the Company shall be sent to:
Starwood Hotels & Resorts Worldwide, Inc.
000 Xxxxxxxxxxx Xxxxxx - Xxx. 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Executive Vice President, General Counsel and Secretary
Facsimile: (000) 000-0000
All notices, requests or other communications required or permitted by this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by mailing via certified mail, postage prepaid, return
receipt requested, in the United States mails to the last known address of the
party entitled thereto, (c) by reputable overnight courier service, or (d) by
facsimile with confirmation or receipt. The notice, request or other
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communication shall be deemed to be received upon actual receipt by the party
entitled thereto; provided, however, that if a notice, request or other
communication is received after regular business hours, it shall be deemed to be
received on the next succeeding business day of the Company.
Section 5.02. Assignment and Succession. The rights and obligations of the
Company under this Agreement may not be assigned in whole or any part except in
the case of a consolidation or merger with, or a transfer of all or
substantially all of the assets of the Company to, another entity acceptable to
Executive, which upon the consummation of such combination transaction expressly
assumes in a writing satisfactory in form and substance to Executive all of the
Company's obligations to Executive hereunder, under all Pre-Existing Awards and
otherwise. No such assignment shall limit or restrict Executive's right to
terminate this Agreement for Good Reason, which right shall remain absolute.
Executive's rights and obligations hereunder are personal and may not be
assigned; provided, however, that in the event of the termination of Executive's
employment due to Executive's death or permanent disability, Executive's legal
representative shall have the right to receive the Severance Package as more
particularly set forth in Section 3.02 above. This Agreement shall inure to the
benefit of and be enforceable by Executive's heirs, beneficiaries and/or legal
representatives.
Section 5.03. Headings. The Article, Section, paragraph and subparagraph
headings are for convenience of reference only and shall not define or limit the
provisions hereof.
Section 5.04. Arbitration. In the event of any controversy, dispute or
claim arising out of or related to this Agreement or Executive's employment by
the Company, the parties shall negotiate in good faith in an attempt to reach a
mutually acceptable settlement of such dispute. If negotiations in good faith do
not result in a settlement of any such controversy, dispute or claim, it shall,
except as otherwise provided for herein be finally settled by expedited
arbitration conducted by a single arbitrator selected as hereinafter provided
(the "Arbitrator") in accordance with the National Rules, subject to the
following (the parties hereby agreeing that, notwithstanding the provisions of
Rule 1 of the National Rules, in the event that there is a conflict between the
provisions of the National Rules and the provisions of this Agreement, the
provisions of this Agreement shall control):
(a) The Arbitrator shall be determined from a list of names
of five impartial arbitrators each of whom shall be an attorney experienced in
arbitration matters concerning executive employment disputes, supplied by the
AAA chosen by Executive and the Company each in turn striking a name form the
list until one name remains (with the Company being the first to strike a name).
(b) The expenses of the arbitration shall be borne by the
Company; and the Company shall bear its own legal fees and expenses and pay, at
least monthly, all of Executive's legal fees and expenses incurred in connection
with such arbitration, except that Executive shall have to reimburse the Company
for his legal fees and expenses if the arbitrator finds that Executive brought
an action in bad faith.
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(c) The Arbitrator shall determine whether and to what extent
any party shall be entitled to damages under this Agreement; provided that no
party shall be entitled to punitive or consequential damages (including, in the
case of the Company, any claim for alleged lost profits or other damages that
would have been avoided had Executive remained an employee), and each party
waives all such rights, if any.
(d) The Arbitrator shall not have the power to add to nor
modify any of the terms or conditions of this Agreement. The Arbitrator's
decision shall not go beyond what is necessary for the interpretation and
application of the provision(s) of this Agreement in respect of the issue before
the Arbitrator. The Arbitrator shall not substitute his or her judgment for that
of the parties in the exercise of rights granted or retained by this Agreement.
The Arbitrator's award or other permitted remedy, if any, and the decision shall
be based upon the issue as drafted and submitted by the respective parties and
the relevant and competent evidence adduced at the hearing.
(e) The Arbitrator shall have the authority to award any
remedy or relief (including provisional remedies and relief) that a court of
competent jurisdiction could order or grant. The Arbitrator's written decision
shall be rendered within sixty days of the closing of the hearing. The decision
reached by the Arbitrator shall be final and binding upon the parties as to the
matter in dispute. To the extent that the relief or remedy granted by the
Arbitrator is relief or remedy on which a court could enter judgment, a judgment
upon the award rendered by the Arbitrator shall be entered in any court having
jurisdiction thereof (unless in the case of an award of damages, the full amount
of the award is paid within 10 days of its determination by the Arbitrator).
Otherwise, the award shall be binding on the parties in connection with their
continuing performances of this Agreement and, except as otherwise provided
herein with respect to Existing Grants, in any subsequent arbitral or judicial
proceedings between the parties.
(f) The arbitration shall take place in New York, New York.
(g) The arbitration proceeding and all filing, testimony,
documents and information relating to or presented during the arbitration
proceeding shall be disclosed exclusively for the purpose of facilitating the
arbitration process and in any court proceeding relating to the arbitration, and
for no other purpose, and shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(h) The parties shall continue performing their respective
obligations under this Agreement notwithstanding the existence of a dispute
while the dispute is being resolved unless and until such obligations are
terminated or expire in accordance with the provisions hereof.
(i) The parties may obtain a pre-hearing exchange of
information including depositions, interrogatories, production of documents,
exchange of summaries of testimony or exchange of statements of position, and
the Arbitrator shall limit such disclosure to avoid unnecessary burden to the
parties and shall schedule promptly all discovery and other
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procedural steps and otherwise assume case management initiative and control to
effect an efficient and expeditious resolution of the dispute. At any oral
hearing of evidence in connection with an arbitration proceeding, each party and
its counsel shall have the right to examine its witness and to cross-examine the
witnesses of the other party. No testimony of any witness, or any evidence,
shall be introduced by affidavit, except as the parties otherwise agree in
writing.
(j) Notwithstanding the dispute resolution procedures
contained in this Section 5.04, either party may apply to any court sitting in
the County, City and State of New York (i) to enforce this agreement to
arbitrate, (ii) to seek provisional injunctive relief so as to maintain the
status quo until the arbitration award is rendered or the dispute is otherwise
resolved, (iii) to confirm any arbitration award, or (iv) to challenge or vacate
any final judgement, award or decision of the Arbitrator that does not comport
with the express provisions of this Section 5.04.
Section 5.05. Certain Additional Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, including without limitation the value of any acceleration in the
vesting of options or other amounts, but determined without regard to any
additional payments required under this Section 5.05) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest and penalties imposed with respect to such taxes)
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 5.05(c), all
determinations required to be made under this Section 5.05, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Xxxxxx Xxxxxxxx LLP (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5.05, shall be paid by the Company to
Executive within five days of the receipt of the Accounting Firm's
determination. The Accounting Firm shall furnish Executive with a written
opinion that its determination of the Excise Tax payable is a position with a
realistic possibility of being sustained on its merits, within the meaning of
Section 6694 of the Code. Any
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determination by the Accounting Firm shall be binding upon the Company and
Executive and shall be the position reported on the federal income tax returns
of the Company and Executive for the applicable taxable year. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that (i)
Gross-Up Payments which will not have been made by the Company should have been
made (an "Underpayment"), consistent with the calculations required to be made
hereunder or that (ii) Gross-Up Payments that have been made will be determined
to have been in excess of the Gross-Up Payments actually required (an
"Overpayment"). In the event that the Company exhausts its remedies pursuant to
Section 5.05(c) and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive. In the event that it is finally
determined that an Overpayment has occurred, Executive shall promptly, and in
any event within 30 days of such determination, refund the amount of the
Overpayment, plus any interest actually paid to the Executive with respect to
the Overpayment, to the Company. The Company shall have the same rights with
respect to the determination of an Overpayment that it has with respect to the
determination of an Underpayment in accordance with Section 5.05(c), including,
without limitation, the right to require the Executive to claim, and xxx for, a
refund of any Excise Tax paid by the Executive upon any Payment or Gross-Up
Payment.
(c) Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5.05(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine, provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to Section 5.05(c), Executive becomes entitled to
receive any refund with respect to such claim, Executive shall (subject to the
Company's complying with the requirements of Section 5.05(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 5.05(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
Section 5.06. Invalidity. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality or enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
Section 5.07. Waivers. No omission or delay by either party hereto in
exercising any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof, or the exercise of
any other right, power or privilege.
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Section 5.08. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 5.09. Entire Agreement. Except as otherwise provided or referred to
herein, this Agreement contains the entire understanding of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof. This Agreement may not be amended, except by a written instrument
hereafter signed by each of the parties hereto.
Section 5.10. Interpretation. The parties hereto acknowledge and agree that
each party and its or his counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its drafting. Accordingly,
(i) the rules of construction to the effect that any ambiguities are resolved
against the drafting party shall not be employed in the interpretation of this
Agreement, and (ii) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party regardless of which party was generally responsible for the preparation of
this Agreement. Except where the context requires otherwise, all references
herein to Sections, paragraphs and clauses shall be deemed to be reference to
Sections, paragraphs and clauses of this Agreement. The words "include",
"including", and "includes" shall be deemed in each case to be followed by the
phrase "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section 5.11. Governing Law. This Agreement and the performance hereof
shall be construed and governed in accordance with the internal laws of the
State of New York without reference to principles of conflict of laws.
Section 5.12. Indemnification. In addition to any additional benefits
provided under applicable state law, as a Director and officer of the Company,
Executive shall be entitled to the benefits of: (a) those provisions of the
Articles of Incorporation of the Company, as amended, and of the by-laws of the
Company as amended, which provide for indemnification of officers and Directors
of the Company (and no such provision shall be amended in any way to limit or
reduce the extent of indemnification available to Executive as a Director or
officer of the Company), (b) the Indemnification Agreement between the Company
and Executive dated as of June 8, 1995, as amended through the date hereof (the
"Indemnification Agreement").
The rights of Executive under such indemnification
obligations shall survive the termination of this Agreement and be applicable
for so long as Executive may be subject to any claim, demand, liability, cost or
expense, which the indemnification obligations referred to in this Section are
intended to protect and indemnify him against.
The Company shall, at no cost to Executive, use its best
efforts to at all times include Executive, during the term of Executive's
employment hereunder and for so long thereafter as Executive may be subject to
any such claim, as an insured under any directors' and officers' liability
insurance policy maintained by the Company, which policy shall provide such
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coverage in such amounts as the Board shall deem appropriate for coverage of all
Directors and officers of the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Executive has signed this Agreement as of the
day and year first above written.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Its: Senior Vice President and Chief Financial
Officer
/s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
XXXXX X. XXXXXXXXXX
